USD-JPY edged out an 11-day high amid general yen softness as stock markets rallied in Japan and Asia after U.S. indexes hit record peaks on Monday. The pair made 102.32, and was settled just below here going into the London open. EUR-JPY logged a two-day peak of 140.78. The AUD traded lower as the market waited for the Federal Budget announcement, which will take place shortly and where details of the deficit tax and rise in fuel excise will be of most interest. AUD-USD drifted to the 0.9335-40 area, which is about 30 pips down on yesterday's London closing level. GBP saw a slight bid following the release of the April BRC retail sales report, which came in much stronger than expected at +4.2% y/y in the headline like-for-like measures (the median had been for +1.6%). Cable touched a peak of 1.6883, before ebbing back to the 1.6870 area. EUR-GBP remained heavy, near the 15-month lows seen yesterday just under 0.8150. EUR-USD trade was uneventfully, flat-lining around 1.3760.

[EUR, USD]EUR-USD trade has remained uneventfully, flat-lining around 1.3760 during the pre-Europe Asia session, remaining in consolidation after the sharp losses seen in the wake of the ECB meeting last Thursday. Last week's sharp rejection from just ahead of 1.4000 and the weekly close on Friday at 1.3745 after breach both the 20- and 50-day moving averages is a bearish price action. Resistance is now marked at 1.3774-80 (which encompasses the Apr-30 low) and 1.3800-15. On the downside, the Apr-4 low at 1.3672 offers the next target.

[USD, JPY]USD-JPY edged out an 11-day high amid general yen softness as stock markets rallied in Japan and Asia after U.S. indexes hit record peaks on Monday. The pair made 102.32, and was settled just below here going into the London open. EUR-JPY logged a two-day peak of 140.78. USD-JPY remains entrenched amid a broad sideways range, roughly contained within 100.00-105.00, which has been in place since early January. This stasis may persist for some time, though technical analysts will be marking this as a potential topping formation after the steep rally from levels around 75.0 that was seen during the second part of last year.

[GBP, USD]We remain sterling bullish, and we expect to see good demand on dips into this Wednesday's BoE Inflation Report, which should bring upward revision to inflation and growth projections and generally present a less dovish, more hawkish tone following a run of strong data out of the U.K.. The 1.7000 is the key level of the moment, a big psychological level and is reportedly a big option barrier. We have been recommending a EUR-GBP short as better vehicle for sterling bulls. The cross fell to a 15-month low on Monday.

[USD, CHF]EUR-CHF is consolidating around 1.2200 after recovering from the mid-121s last week, which reflected a correction in the Swiss franc's safe haven premium following Putin's mollifying words of diplomacy with regard to Ukraine. The cycle low of 1.2104 and 1.2100 are key support levels. The threat of SNB intervention into its 1.2000 limit peg is helping to deter franc buying to some extent. SNB's Jordan repeated recently that the central bank remains committed to defending the currency cap.

[USD, CAD]USD-CAD firmed back to around 1.0900 after running to a low of 1.0812 on Friday. The pair had been in a consolidation phase since late January following a four-month rally period from sub-0.9700 levels, with the bias having tilted to the downside. However, the still-dovish outlook for BoC policy seems to be putting a limit on the CAD's upside. We expect a choppy, sideways bias in USD-CAD.